May 29, 2017 |

Interview: Lodgify’s Dennis Klett

What’s Lodgify all about?

Lodgify is a Software-as-a-Service that enables vacation rental owners to easily create their own optimized and mobile-friendly websites, including, and most crucially, the ability to accept online bookings and process payments.

What was the inspiration behind Lodgify’s creation?

What happened was that my parents ran a vacation rental in Germany and that’s how I got involved with the space. Marco (one of our co-founders) and his family had an agriturismo (rural vacation rental) business in Italy, so we were both trying to help our parents market their rentals online, advertise them and get more bookings.

At that time, HomeAway was already a strong player, but we didn’t like their product and thought it was overpriced. While we were in university, we were both into web design (I was doing CSS and HTML at that time and Marco was a coder), so we said “let’s build a HomeAway, but offer it for free” and that’s what we did. It never took off because we were just two guys and we couldn’t build a product like HomeAway from scratch. However, we enjoyed building the product; I think we had a great one and we had a good time creating it.

After that, we kind of pivoted into saying “instead of being a listing site, let’s create websites for these owners”. We had an early MVP where we sold our website services at premium prices – that’s the only thing that generated our revenue. But then it kind of fizzled out as we had our own separate jobs – I had my own corporate career and Marco went as a coder. A bit further down the line, we realized that people were still visiting our old company website, and most importantly, still using it. So that’s when we decided we’d use all the knowledge we’d learned in the past (in building the system), focus on the product and build a software that would really help small businesses like our parents’, who have limited understanding of technical stuff, and empower them with tools to get more bookings.

At that time, Shopify got big in Canada building eCommerce, and that also inspired our idea to build Lodgify.

Sharing your housing is one of the most well-known sharing economy services – why do you think that is?

Sharing is mainly useful for capital objects; things that are really expensive like cars, housing, etc. So that’s one reason.

Another reason is that, with Airbnb, there’s this local factor. You don’t want to have a sterilized hotel experience because you want this more personalized stay where you feel like a local. That’s best given if you actually live with a local.

What are some of the challenges Lodgify faced when it first started?

We were bootstrapped, meaning everything was self-funded. So the challenge was that with super limited resources (no money, no people…), it’s very hard to set up a business.

I can’t pick any specific challenge in particular, but I think the key thing to mention was that we were bootstrapped. We were in a coworking space, the money came out of our pockets – so it was very painful. No salaries, long nights… with 9 to 5 jobs in parallel, we spent many long nights and weekends working on Lodgify.

We built a very complex system, so there was a lot of coding involved.

What are the main barriers to home sharing?

  1. Legal topics – for example, Barcelona is super strict, New York is super strict (although Airbnb has now come to an agreement with the local government). But one of the main topics that trip owners up, time and time again, are local regulations and regulatory barriers.
  2. Handling bookings – the people who rent out their homes aren’t professionals, so it’s very tedious for them to manage all of these bookings. They need a software that guarantees a smooth booking process and automates all these things to make it simpler.
  3. Trust – trust is also a key barrier when it comes to scams, screening guests, and the review system.

What advice do you have for new startups?

My advice for new startups is to really test your product and apply the lean startup method. When we first started, we didn’t test our product enough and we ignored the lean startup concept. If we would have applied a leaner approach, we would’ve saved a lot of time by doing minimum viable products, getting data and basing decisions on that. Even if it sounds like a fancy concept, it works.

Secondly, build a data-driven company from day one. Data is the future and it will help you with budgeting, reports, problem-solving – everything.

Finally, get super close to your customers. Pick up the phone and talk to them, find out who they are and what their real problems are. Very often this step is being neglected even though it’s hugely important.

What’s your prediction for the future of payment services in the sharing economy?

The two main players for the future of sharing economy service payments are likely to be blockchain and Bitcoin. With blockchain and smart contracts, there is no longer a trust problem when making payments online.

You are based in Barcelona – what is the startup scene like down there? Any new trends or cool startups that you think we should test?

The startup scene is great… Barcelona is a fantastic place to work because it has an international airport hub served by plenty of low-cost airlines, high-skilled workforce available, Mediterranean climate with 2,400 hours of sun per year, extensive, modern and reliable transport system and a relatively low cost of living (compared with other European startup hubs like Berlin, Paris or London). It is also very international and boasts a growing community of entrepreneurs.

Cool Barcelona-based startups to look into letgo, Wallapop and Typeform.

What are some of your favorite sharing economy services?

There are the usual big players like Airbnb and Uber, they kicked off the concept of the sharing economy. Airbnb is a great example, but I believe they’ve been too professionalized and we obviously prefer if travelers can book directly with vacation rental owners.

Personally, I’m a huge fan of Transferwise and I personally use it a lot. It’s really disrupting a completely old-school banking industry and making things a lot more efficient and cheaper.

I also love Kickstarter because it’s a great concept that allows small companies get funding to launch their business.

What developments would you like to see within the sharing economy?

In the vacation rental space, we’d like to see more people starting their own VR businesses. There are a lot of people that have second homes which are empty for most of the year, but we’d love for the sharing economy to spark new businesses like this.
In terms of the sharing economy as an industry, it needs regulation, but that shouldn’t impede its growth. Regulations adapted to this growing industry is what is missing at the moment. The sharing economy is a great concept and example of using capital goods efficiently.



About the author:
Dennis Klett. CEO of Lodgify, a vacation rental software solution that allows hospitality business owners and managers to build their own mobile-friendly vacation rental website and accept direct bookings.